Latest Understanding and Application of Company Law

Author: Jiang Ping, Li Guoguang
Publisher:
Publish Date: 2001-06-01
Features: The 18th session of the Standing Committee of the 10th National People's Congress passed the "Company Law of the People's Republic of China" (Revised) on October 27, 2025. The new Company Law, based on the new requirements of China's social and economic development and drawing on the new achievements of company law reforms in various countries, conducts in-depth analysis and argumentation on many important issues in practice, amending or abolishing provisions that are no longer relevant to reality, and further improving effective systems and rules. The changes and innovations of the new Company Law mainly lie in the following aspects:
First, in terms of the capital system, it reflects the legislative philosophy adjustment from solely emphasizing capital credit to balancing capital credit and asset credit, lowering the threshold for company establishment, relaxing excessive regulation on companies, significantly reducing the minimum registered capital required for company establishment, loosening restrictions on shareholder contributions, allowing for phased capital contributions, abolishing restrictions on company reinvestment, and expanding circumstances where companies can repurchase their own shares.
Second, in terms of the corporate governance structure, it improves the shareholders' meeting and board of directors system, enriches the provisions on the convening and proceedings of shareholders' meetings and board of directors meetings; enhances the powers of the supervisory committee, improves the meeting system of the supervisory committee, and strengthens its role; adds provisions for the establishment of independent directors for listed companies; and makes more specific and detailed provisions on the fiduciary and diligent duties of company directors and senior management to the company, as well as the responsibilities for violating these duties.
Third, it further clarifies the basic property rights structure and relationship between the company enjoying legal person property rights and shareholders enjoying equity. It allows companies to arbitrarily designate one of the chairman of the board, executive director, or manager as the legal representative; establishes the standard for equity determination, where changes in limited liability company equity take effect based on the shareholder register and are subject to opposition through registration; further strengthens the protection of workers' interests and their participation in company management, stipulating a minimum ratio of one-third of supervisory committee members to be workers and the voluntary establishment of worker directors; and scientifically divides the reasonable division of labor between the Company Law and the Securities Law, eliminating the original legislative conflicts and overlaps by taking advantage of the rare opportunity of revising both laws simultaneously.
Fourth, the most prominent revision is the complete recognition and adoption of the one-person company and the corporate veil lifting system. When a company shareholder abuses the independence of the company's legal person status and the limited liability of shareholders to evade debts and severely harms the interests of company creditors, such a shareholder shall lose the right to be liable for the company's debts only up to their investment, and instead shall bear joint and several liability for all the company's debts.
After the promulgation of the new Company Law, correctly understanding and fully implementing its new content, continuing to comprehensively review and study the legal systems related to this law, actively researching and discussing the establishment, revision, and abolition of relevant legal systems, and continuing to monitor the implementation of this law to accumulate experience for the further improvement of relevant systems have become the common tasks of relevant judicial and administrative organs.
In light of this, our company has organized experts and scholars from the Standing Committee of the National People's Congress, the Supreme People's Court, the Supreme People's Procuratorate, the Ministry of Public Security, the Ministry of Finance, the People's Bank of China, the State-owned Assets Supervision and Administration Commission, the General Administration of Industry and Commerce, the China Banking Regulatory Commission, the China Insurance Regulatory Commission, China University of Political Science and Law, Renmin University of China, Peking University, Tsinghua University, Beijing Normal University, the University of International Business and Economics, and other departments and units to jointly write this series of "Practical Series on the New Company Law and Related Regulations."
The authors of this series include important members of the Company Law Revision Expert Group, experts from the highest legislative body, senior judges from the Supreme People's Court involved in the revision of the Company Law, administrative interpretation drafting, and judicial interpretation drafting, as well as experts from relevant central government departments. They also include university scholars dedicated to Company Law research and participation in Company Law revision discussions. In the specific writing process, they adhere to the legislative intent, combine with practical difficulties, and provide comprehensive, systematic, and detailed interpretations and explanations of the specific systems of the new Company Law (especially the newly established systems in this revision) and their applications from different perspectives and levels.
We believe that the publication of this series will play a positive and unique role in promoting, learning, and implementing the new Company Law.